Universal To Bid For Bertelsmann Arm

Universal Music Group, the world's largest record business, is among the bidders preparing to submit offers for Bertelsmann's music publishing business by Monday's first round deadline.

Universal controls 12% of the global music publishing market and would become the world's largest music publisher if it acquired BMG's arm, which has a share of 13%. Other bidders include Apax Partners, the private equity firm, and Warner Music Group.

British record group EMI is reportedly considering leading a consortium bid because its status as the world's biggest music publisher precludes an outright bid.The sale is complicated by the ongoing takeover stalemate between Warner and EMI. Both groups are attempting to buy each other, with the added complication that regulators are expected to block the combination of Warner and EMI's music publishing arms. Warner Chappell, Warner's publishing business, is expected to be sold regardless of who wins the auction because it is seen as a less valuable asset than EMI's publishing business. Nonetheless, it has a greater market share than the BMG operation and Universal executives concede privately that it is their preferred target.

BMG Music Publishing was put up for sale by its parent company in May as part of a deal to buy back a 25% stake in Bertelsmann owned by Groupe Bruxelles Lambert. Analysts value the business, with a back catalogue including songs by Nelly and Coldplay, at between $1.4bn (£755m) and $1.7bn.

Music publishers own the copyright to songs and earn a royalty every time they are played on the radio, bought in shops or played on film soundtracks. The business has escaped the worst of the digital download revolution that ravaged its record industry peers and its strong, stable cash flows are attractive to financial buyers.

Source: http://business.guardian.co.uk